Pension and Other Post-retirement Benefits

12 Months Ended

Dec. 31, 2011

Pension and Other Post‑retirement Benefits [Abstract]

Pension and Other Post‑retirement Benefits [TextBlock]

Note 17 - Pension and Other Post‑retirement Benefits

One of our subsidiaries has a qualified non‑contributory retirement plan to provide retirement income for certain eligible full-time employees who are not covered by a union retirement plan.  Pension benefits under the plan are based on length of service and compensation.  Our subsidiary contributes amounts necessary to meet minimum funding requirements.  This plan has been curtailed and no new employees can enter the plan. 

We provide certain health care benefits for retired employees not subject to collective bargaining agreements.  Such benefits are not provided to any employee who left us after December 31, 2003.  Employees who left us on or before that date become eligible for those benefits when they reach early retirement age if they have met minimum age and service requirements.  Effective December 31, 2006, we terminated these health care benefits for retired employees and their spouses or dependents that were eligible for coverage under Medicare.  We provide coverage to retired employees and their spouses until the end of the month in which they become eligible for Medicare (which generally is age 65).  Health care benefits for retirees are provided under a self‑insured program administered by an insurance company.

We were required to recognize the funded status (i.e., the difference between the fair value of plan assets and the projected benefit obligations) of our pension plan and other post-retirement benefits in the December 30, 2006, statement of financial position, with a corresponding adjustment to accumulated other comprehensive income, net of tax.  The adjustment to accumulated other comprehensive income at adoption represents the net unrecognized actuarial losses, unrecognized prior service costs, and unrecognized transition obligation remaining, all of which were previously netted against the plan’s funded status in our statement of financial position.  Further, actuarial gains and losses that arise in subsequent periods and are not recognized as net periodic benefit cost in the same periods will be recognized as a component of other comprehensive income.  These amounts will be subsequently recognized as a component of net periodic benefit cost pursuant to our accounting policy for amortizing such amounts.

Accumulated other comprehensive income consists of the following amounts that have not yet been recognized in net periodic benefit cost:

	December 31, 2011
			Other Post-
			retirement
(in thousands)	Pension		Benefits		Total
Unrecognized prior service credits	$	-	$	-	$	-
Unrecognized actuarial losses (gains)		24,368		(258)		24,110
Unrecognized net periodic cost (benefit)		24,368		(258)		24,110
Less deferred taxes (benefit)		(9,504)		101		(9,403)
Total	$	14,864	$	(157)	$	14,707

	January 1, 2011
			Other Post-
			retirement
(in thousands)	Pension		Benefits		Total
Unrecognized prior service credits	$	-	$	(21)	$	(21)
Unrecognized actuarial losses (gains)		17,800		(206)		17,594
Unrecognized net periodic cost (benefit)		17,800		(227)		17,573
Less deferred taxes (benefit)		(6,942)		88		(6,854)
Total	$	10,858	$	(139)	$	10,719

The prior service credits and actuarial losses (gains) included in accumulated other comprehensive income and expected to be recognized in net periodic cost (benefit) during the fiscal year ended December 29, 2012 are $2,256,000 and ($23,000) related to pension and other post-retirement benefits, respectively.

Funded Status

The following table sets forth the actuarial present value of benefit obligations and funded status of the curtailed pension plan and other post‑retirement benefits for the years ended.

	Pension Benefits				Other Post-retirement Benefits
(in thousands)	2011		2010		2011		2010
Funded Status
Projected benefit obligation
Beginning of year	$	(43,125)	$	(41,049)	$	(744)	$	(761)
Interest cost		(2,121)		(2,211)		(35)		(39)
Participant contributions		-		-		(36)		(44)
Actuarial gain (loss)		(6,843)		(3,005)		67		78
Benefits paid		3,519		3,140		27		22
End of year		(48,570)		(43,125)		(721)		(744)
Fair value of plan assets
Beginning of year		29,762		29,652		-		-
Actual return on plan assets		576		2,345
Employer contributions		6,076		905		(9)		(22)
Participant contributions		-		-		36		44
Benefits paid		(3,519)		(3,140)		(27)		(22)
End of year		32,895		29,762		-		-
Funded status		(15,675)		(13,363)		(721)		(744)
Accumulated benefit obligation	$	(48,570)	$	(43,125)	$	(721)	$	(744)

                Amounts recognized in the consolidated balance sheets consist of:

	Pension Benefits				Other Post-retirement Benefits
(in thousands)	2011		2010		2011		2010
Current liabilities	$	-	$	-	$	(104)	$	(118)
Non-current liabilities		(15,675)		(13,363)		(617)		(626)
Deferred tax asset (liability)		9,504		6,942		(101)		(88)
Accumulated other comprehensive loss (income)		14,864		10,858		(157)		(139)
Net amount recognized	$	8,693	$	4,437	$	(979)	$	(971)

Components of net periodic benefit cost (income)

                The aggregate costs for our retirement benefits included the following components:

	Pension Benefits						Other Benefits
(in thousands)	2011		2010		2009		2011		2010		2009
Interest cost	$	2,121	$	2,211	$	2,327	$	35	$	39	$	48
Expected return on plan assets		(1,877)		(1,854)		(1,790)		-		-		-
Amortization of prior service credits		-		-		-		(21)		(30)		(82)
Recognized actuarial loss (gain)		1,576		1,401		1,370		(16)		(6)		(5)
Net periodic benefit cost (gain)	$	1,820	$	1,758	$	1,907	$	(2)	$	3	$	(39)

Assumptions

                Weighted-average assumptions used to determine benefit obligations at December 31, 2011 and January 1, 2011:

	Pension Benefits		Other Benefits
	2011	2010	2011	2010
Discount rate	4.35%	5.10%	4.35%	5.10%
Rate of compensation increase	N/A	N/A	N/A	N/A

                Weighted-average assumptions used to determine net periodic benefit cost for years ended December 31, 2011 and January 1, 2011:

	Pension Benefits		Other Benefits
	2011	2010	2011	2010
Discount rate	5.10%	5.60%	5.10%	5.60%
Expected return on plan assets	6.00%	6.50%	N/A	N/A
Rate of compensation increase	N/A	N/A	N/A	N/A

                Assumed health care cost trend rates were as follows:

	December 31, 2011	January 1, 2011
Current year trend rate	7.00%	8.00%
Ultimate year trend rate	5.00%	5.00%
Year of ultimate trend rate	2014	2014

                Assumed health care cost trend rates have an effect on the fiscal 2011 amounts reported for the health care plans.  A one-percentage point change in assumed health care cost trend rates would have the following effects (in thousands):

		1% Increase		1% Decrease
Effect on total of service and interest cost components	$	-	$	-
Effect on post-retirement benefit obligation		2		(2)

In December 2003, the Medicare Prescription Drug, Improvement and Modernization Act of 2003 (the Act) became law in the United States. The Act introduces a prescription drug benefit under Medicare as well as a federal subsidy to sponsors of retiree health care benefit plans that provide a benefit that is at least “actuarially equivalent” to Medicare.   We believe that our postretirement benefit plan is not actuarially equivalent to Medicare Part D under the Act and consequently will not receive significant subsidies under the Act.

Pension Plan Investment Policy, Strategy and Assets

                Our investment policy is to invest in equity, fixed income and other securities to cover cash flow requirements of the plan and minimize long-term costs.  The targeted allocation of assets is 50% group annuity contract and 50% equity and debt securities.  The pension plan’s weighted-average asset allocation by asset category is as follows:

	December 31,	January 1,
	2011	2011
Equity securities	51%	34%
Debt securities	0%	13%
Group annuity contract	49%	53%

Pension Plan Investment Valuation

                Equity and debt securities consist of mutual funds which are public investment vehicles valued using the Net Asset Value (“NAV”) provided by the administrator of the fund.  The NAV is based on the value of the underlying assets owned by the fund, minus its liabilities, and then divided by the number of shares outstanding.  The NAV is a quoted price in an active market and classified within level 1 of the fair value hierarchy of ASC 820.

                The group annuity contract is an immediate participation contract held with an insurance company that acts as custodian of the pension plan’s assets.  The group annuity contract is stated at contract value as determined by the custodian, which approximates fair value.  We evaluate the general financial condition of the custodian as a component of validating whether the calculated contract value is an accurate approximation of fair value.  The review of the general financial condition of the custodian is considered obtainable/observable through the review of readily available financial information the custodian is required to file with the Securities and Exchange Commission.  The group annuity contract is classified within level 3 of the valuation hierarchy of ASC 820.

                The following tables sets forth by level, within the fair value hierarchy, the plan’s assets at fair value as of December 31, 2011 and January 1, 2011:

	Investments at fair value - December 31, 2011
(in thousands)	Level 1		Level 2		Level 3		Total
Equity securities	$	16,674	$	-	$	-	$	16,674
Debt securities		-		-		-		-
Group annuity contract		-		-		16,221		16,221
Total investments	$	16,674	$	-	$	16,221	$	32,895

	Investments at fair value - January 1, 2011
(in thousands)	Level 1		Level 2		Level 3		Total
Equity securities	$	9,992	$	-	$	-	$	9,992
Debt securities		3,771		-		-		3,771
Group annuity contract		-		-		15,999		15,999
Total investments	$	13,763	$	-	$	15,999	$	29,762

                The following tables set forth a summary of changes in the fair value of the pension plan’s level 3 assets for the years ended December 31, 2011 and January 1, 2011:

	Group
(in thousands)	annuity contract
Balance at 1/1/2011	$	15,999
Interest income		877
Realized gains/(losses)		243
Purchases, sales, issuances and settlements (net)		(898)
Balance at 12/31/2011	$	16,221
	Group
(in thousands)	annuity contract
Balance at 1/2/2010	$	16,128
Interest income		918
Realized gains/(losses)		194
Purchases, sales, issuances and settlements (net)		(1,241)
Balance at 1/1/2011	$	15,999

Estimated Future Benefits Payments  

The following benefit payments, which reflect expected future service, as appropriate, are expected to be paid as follows (in thousands):

Year	Pension Benefits		Other Benefits
2012	$	3,257	$	104
2013		3,206		93
2014		3,184		71
2015		3,223		58
2016		3,250		44
2017 or later		16,163		185
	$	32,283	$	555

Expected Long-Term Rate of Return

                The expected return assumption was based on asset allocations and the expected return and risk components of the various asset classes in the portfolio.  This assumption is assumed to be reasonable over a long-term period that is consistent with the liabilities.  Management has reviewed these assumptions and takes responsibility for the valuation of pension assets and obligations.

Employer Contributions

Pension Plan

                We anticipate making contributions of $3.5 million during the measurement year ending December 29, 2012.

Multi-Employer Plans

                Approximately 6.2% of our employees are covered by collectively-bargained pension plans.  Contributions are determined in accordance with the provisions of negotiated union contracts and are generally based on the number of hours worked.  Amounts contributed to those plans were $3.3 million, $3.3 million and $3.5 million in fiscal 2011, 2010 and 2009, respectively.

Certain of our unionized employees are covered by the Central States Southeast and Southwest Areas Pension Funds (“the Plan”), a multi-employer pension plan.  Contributions are determined in accordance with the provisions of negotiated union contracts and are generally based on the number of hours worked.  Based on the most recent information available, we believe the present value of actuarial accrued liabilities of the Plan substantially exceeds the value of the assets held in trust to pay benefits.  The underfunding is not a direct obligation or liability of the Company.  Moreover, if the Company were to exit certain markets or otherwise cease making contributions to the Plan, the Company could trigger a substantial withdrawal liability.  However, the amount of any increase in contributions will depend upon several factors, including the number of employers contributing to the Plan, results of the Company’s collective bargaining efforts, investment returns on assets held by the Plan, actions taken by the trustees of the Plan, and actions that the Federal government may take.  We are currently unable to reasonably estimate a withdrawal liability.  Any adjustment for withdrawal liability will be recorded when it is probable that a liability exists and can be reasonably estimated.

The following table provides additional information about the Plan and our participation in it:

		Pension Protection Act Zone Status			Company Contributions to Plan
Pension Fund	EIN/Pension Plan Number	2011	2010	FIP/RP Status Pending/ Implemented	2011	2010	2009	Surcharge Imposed	Expiration Date of Collective-Bargaining Agreement
Central States, Southeast
and Southwest Areas Pension Plan	36-6044243-001	Red as of 12/31/10	Red as of 12/31/09	Yes	$3,304,000	$3,336,000	$3,546,000	Yes	1/26/2013 to 2/24/2014 (a)

 ^(a)  The Company is party to three collective-bargaining agreements that require contributions to the Central States, Southeast and Southwest Areas Pension Plan.  These agreements cover warehouse personnel and drivers in our Bellefontaine, Ohio and Lima, Ohio distribution centers.

For each of the years reported on, our annual contributions to the Plan have not exceeded more than 5 percent of total employer contributions to the Plan, as indicated in the Plan’s most recently available annual report for the year ended December 31, 2010.